West Coast cargo handlers need technology updates to remain competitive, but workforce disruption looms
It took close to 18 months to secure a new collective agreement between B.C.‘s port workers and maritime employers; it will take far longer to secure consensus between the two sides on how the province’s terminal operators will incorporate automation in their cargo-handling processes.
Major U.S. port competitors on the West Coast are already struggling with that consensus.
The fight over plans by the port division of the world’s largest container carrier company to upgrade Pier 400 infrastructure at the Port of Los Angeles is a flashpoint example.
APM Terminals (APMT), which operates under the Maersk Group, applied in November 2018 to the port’s harbour commission for a coastal development permit to, among other things, modernize the terminal’s infrastructure with battery-powered automated cargo-handling equipment.
Aside from automating some of the terminal’s operations, the equipment will allow Pier 400 to meet Port of Los Angeles air emissions regulations, which require all diesel machinery to be removed from terminal operations by 2030.
But the International Longshore and Warehouse Union (ILWU) sees approval of the APMT plan as the first step in opening the automation floodgates in the ports of Los Angeles and Long Beach, which combined constitute the world’s ninth-busiest port complex.
In late June, the Los Angeles Board of Harbor Commissioners approved the APMT application, but Los Angeles city council, citing fears of widespread job losses at Pier 400 from automation, later vetoed the permit.
Despite that veto and the concerns raised over future job losses from automation, the board again voted to approve the permit application on July 11. If there is no further city council opposition to APMT’s project by August 7 following summer recess, the board’s approvalwill be final.
Tom Boyd, APMT’s communications manager for North America, said the board’s decision to reaffirm its earlier vote on the company’s permit allows APMT to continue to invest in the port’s infrastructure and productivity so that the company “will be able to remain competitive for the southern California port community, generating economic impact while meeting the emission requirements of the Clean Air Action Plan.”
The board’s decision also underscores the inevitability of automation integration at major international seaports.
With an annual capacity of around four million 20-foot equivalent units (TEUs), Pier 400 is North America’s largest container cargo terminal; it is also one of its most expensive. The average annual salary of its longshoremen ranges around US$157,000.
According to the collective agreement between unionized port workers and employers in California, no current ILWU member will lose his or her job or pension benefits from Pier 400 automation.
But there are no guarantees that job will survive once an ILWU member retires.
The union’s fight to improve the chances of job survival resulted in a tentative agreement reached July 18 between the ILWU, APMT and the Pacific Maritime Association to establish a training program to upgrade port worker skills for the incoming automation infrastructure.
An APMT statement on the agreement noted that “it is critical to the success of the Port of Los Angeles that the ILWU is trained for the jobs of the future.”
Environmental, efficiency, reliability and market forces are accelerating the push to incorporate more automation in major North American ports. A recent Drewry container ports briefing noted that the average time spent in West Coast North American (WCNA) ports for larger container ships can range up to six days.
Responding to industry questions about how those ports could speed up vessel handling, the U.K.-based shipping consultancy noted that because WCNA ports do not operate 24 hours per day, in part because of the high cost of night-shift labour, their cranes and other infrastructure assets are not used as intensively as those assets are elsewhere in the world.
“The future is 24-hour operations,” said Boyd. “This is the way it is going.”
And while Neil Davidson, Drewry’s senior ports and terminals analyst, cautioned that automation is not “some kind of magic wand that will result in faster vessel handling,” he said its value is “very evident in other ways - consistency and predictability of performance, safety, lower emissions, better use of yard areas, etc.”
It also has benefits elsewhere along the complex cargo movement chain.
For example, Weston LaBar, CEO of the Long Beach-based Harbor Trucking Association, said his organization strongly supports container terminal modernization projects, because if done right they improve the efficiency, consistency and predictability of trucker turn times and dual transactions in an appointment-driven ecosystem where time is money for truckers and shipping customers.
“We think that what APM Terminals is doing is going to help them immensely,” LaBar said.
He pointed to Long Beach Container Terminal (LBCT) as an example of shipping automation done right.
LBCT is fully automated, and when completely built out it will be able to handle about 3.4 million TEUs per year. That’s roughly what the entire Port of Vancouver handled in 2018.
It is also, according to LaBar, “probably the best terminal in North America.”
Why? “If you look at things like [trucker] turn times, dual transactions [when a trucker drops a container and picks one up rather than just dropping or picking up] versus single transactions, LBCT leads the way on everything.
Their worst month from a turn-time perspective since they opened was 52 minutes for a dual transaction, whereas the best month for any other conventional terminal is close to an hour, and we regularly see some of the terminals at 80, 90, 100 minutes. So when you take into consideration that in a good month LBCT’s turn time is closer to 30 minutes, that is phenomenal.”
Back in B.C., automation was a major sticking point in the lengthy contract negotiations between ILWU Canada and the BC Maritime Employers Association (BCMEA).
And even with the new contract recently ratified, it remains thus.
Jeff Scott, chairman of the BCMEA board, told Business in Vancouver that automation “improves efficiency, secures existing jobs and opens up employment opportunities.”
But it’s unclear how the new port workers contract will help or hinder the introduction of automation at B.C. container terminals.
Scott said language in the collective agreement allows BCMEA members to discuss automation initiatives with the ILWU through a new employeremployee technology committee.
He added that the province’s maritime employers have invested heavily in what they see as a world-leading training centre on Mitchell Island to help port workers adapt to incoming port technologies.
Scott also pointed out that, even though BCMEA members have been investing in innovation and automation over the past 10 years, annual hours worked at B.C. marine terminals have risen to nine million from six million and the workforce has increased 34%.
But the new technology committee’s authority to approve or reject any major new automation initiatives at B.C. container terminals has yet to be clarified.
“I think that is something we have to figure out as we move forward,” said Scott. “But the intention of the committee is to give notice of intention and then create an opportunity for dialogue.”
That dialogue presented by ILWU Canada representatives at public hearings into the Vancouver Fraser Port Authority‘s $2.8 billion Terminal 2 proposal for Roberts Bank shows little longshore appetite for extensive automation, which would be incorporated in the new terminal.
In his May 16 presentation to the Canadian Environmental Assessment Agency review panel, Tom Doran, president of ILWU Local 502, questioned the overall net economic benefit of automation at container terminals.
He claimed that fully automated and digitized marine terminal operations elsewhere in the world have reduced port workforces by as much as 70% to 80%.
However, Doran pointed to GCT Deltaport as an example of how automation should be incorporated in container terminals.
Last October, GCT Global Container Terminals Inc. unveiled its $300 million rail densification project at GCT Deltaport. The first semi-automated initiative of its kind in the country has thus far increased GCT Deltaport‘s railcar movement capacity by 25%. Once the project is fully operational in 2020, the company says GCT Deltaport‘s container cargo capacity will be increased by 33% and its ability to move railcar boxes will jump by 50%.
The ILWU was involved in the project, which Doran said introduced automation and new technology at the terminal but was “configured in such a way where it maintained the base of employment.”
The global supply chain’s complexity requires that automation be incorporated strategically if it is to deliver efficiencies for terminal operators and the rest of the supply chain.
According to Lars Jensen, CEO of Copenhagen-based SeaIntelligence Consulting, moving containers in an automated terminal is not necessarily more efficient than in a manual terminal because robots are not necessarily more efficient than humans when it comes to operating machinery like the huge gantry cranes that move containers from ships to trucks or railcars. But Jensen added that a combination of automation and manual labour instituted in the right areas of a port or container terminal will deliver cost-efficiency gains.
McKinsey & Co.‘s Future of Automated Ports agreed.
It found that automation does not guarantee increased port productivity. But the report concluded that, if planned and executed well, it can cut port operating expenses by between 25% and 55% and increase productivity by 10% to 35%.
LaBar said LBCT has succeeded because its automated infrastructure was planned and tested before going live.
“They got amazing hardware, but they got software to run the hardware, and I think that is one of the issues we see with other terminals. It is not that they don’t have the ability, [but] sometimes they don’t run it any differently than they would run a conventional terminal, and sometimes they grab off-the-shelf technology and try to plug it in to manage this customized equipment, and that doesn’t always work as well. You can’t run a supercomputer with Windows 95.”
LaBar conceded that automation will be disruptive for port workers.
But he noted that the current longshore contract provides for a period of transition at Pier 400.
“As part of the contract, the steadies [regular dock workers] are guaranteed their job and their pensions even if there is no work. So in that situation it’s not like you are going to see mass layoffs. What will happen is they may not have a job for their children in 20 years, but I don’t know anybody who has a birthright to a job, with the exception of the Queen of England.”
The new ILWU training program should help at least some port workers at Pier 400 be part of the new automation equation rather than be a casualty of it.
This article written by Timothy Renshaw originally appeared in Business in Vancouver (BIV).